The eurozone is still highly uncertain about its policies. Russia's decision to reduce natural gas supply is facing additional inflation risks.
Natural gas prices in Europe jumped +39.7% this week alone. Electricity prices in major European countries have already risen by +228.6% year-on-year.
Concerns are focused on southern European countries with high debt ratios and weak fundamentals (expanding the gap between Germany and interest rates). Opinion that it is not prepared for the first increase in interest rates in 11 years and a surge in living prices.
Europe has become more uncertain.
The eurozone, whose CPI rose to its highest level (+8.1%) since statistics were compiled in May, faces additional inflation risks due to Russia's decision to cut natural gas supply. Russia cut its gas supply to Germany by 40 percent on the 15th, cut 33 percent further on the 16th, and cut its supply to Italy by 15 percent.
Natural gas prices in Europe jumped +39.7 percent this week alone as news of Russia's energy weaponization spread. Electricity prices in major European countries have risen by +228.6% on average compared to the previous year, which is considered difficult for European companies/households to handle for a long time.
Concerns are particularly focused on southern European countries with high debt ratios and weak economic fundamentals (expanding the gap between Germany and interest rates). The ECB began to extinguish the fire through an emergency meeting on the 15th, but it is unlikely to be easy to handle the combination of rising interest rates and soaring living prices for the first time in 11 years.
Russia has launched a massive counterattack against the United States, the European Union and the West using food and energy as weapons. Russia stopped supplying natural gas to Poland, Bulgaria and the Netherlands in April for supporting Ukraine, and this time it reduced the size of gas supply to Germany and Italy. Russia has also blocked Ukraine's food export route near the Black Sea and has remained intransigent in negotiations between the United Nations and the United Nations, raising concerns that the global food shortage will worsen.
According to CNN, natural gas prices in the European Union soared 42% this week due to Russia's reduced gas supply. Eni, Italy's largest energy company, said Russia's state-run gas company Gazprom has decided to cut its gas supply by about 15 percent.
Russia's Gazprom said it would reduce gas supply to the EU by 33 percent through its gas pipeline "Nort Stream 1." Gazprom announced on the previous day that it would reduce the gas supply by 40 percent because Siemens Energy's gas turbine was delayed. Russian Ambassador to the European Union Vladimir Zizhof threatened, "This gas pipeline valve may be completely closed." "This will be a disaster for Germany," he warned.
The Wall Street Journal (WSJ) reported on the 16th (local time) that gas supply through Nord Stream 1 decreased by 55 percent last week, and gas prices rose 12% in the aftermath. "Russia is weaponizing natural gas to target EU members who have provided weapons to Ukraine or imposed economic sanctions on Russia," the WSJ said.
European countries have become unable to control inflation due to soaring natural gas prices. Bond markets in European countries are fluctuating and the economic stability of eurozone countries is being questioned, the newspaper said.Germany's Uniper SE, which deals with Russian Gazprom, Austria's OMV AG and Italy's Eni all said gas supply from Gazprom had decreased.
European countries are trying to diversify their gas imports, but there are no sharp measures right now. European countries have signed contracts with the United States, Egypt, and Israel to import liquefied natural gas (LNG), and have decided to expand gas imports from Norway and Azerbaijan. In fact, however, it could take months or more than a year for gas to reach Europe, and European countries are facing a gas crisis this winter.
Russia is sharply increasing its energy exports to China and India as Western sanctions have reduced exports of crude oil and natural gas. Russia's exports to China increased by more than 67.5% in January and May, Gazprom's president Alexei Miler said on the 16th. Millet made the remarks at the International Economic Forum (SPIEF) in St. Petersburg, Russia.
Russia is also weaponizing food and fertilizer. Russia is trying to exploit the global food crisis to induce the United States and the West to lift economic sanctions on Russia. The United States and the European Union have not imposed sanctions on the food and agricultural sectors, sanctioning Russian energy and financial institutions.
In particular, the U.S. government is trying to expand Russian fertilizer imports as fertilizer prices soar in the wake of the Ukrainian war. The U.S. government has advised grain companies and carriers that import Russian fertilizers to increase imports of Russian fertilizers.
Since Russia invaded Ukraine on February 24, talks organized by the United Nations have been held in the wake of the global food crisis and fertilizer supply shortages. The United States and the European Union have accused Russia of weaponizing food and controlling ports to prevent Ukraine from exporting grain.
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